LAM13210: Accounting for Part VII Transfers - IFRS

**Transferor** Profit/loss recognised in income statement, based on difference between consideration received and carrying value of net assets transferred.

**Transferee** Is it a business combination?

- **Yes**

  - Is the transfer from a third party or intra-group?
    - **3rd party**
      - Option 1: Fair value/purchase method
        - FV of consideration > FV of net assets acquired, net debit is goodwill (B/S).
        - FV of consideration < FV of net assets acquired, net credit is gain (income statement).
    - **Intragroup**
      - Option 2: Pooling of interests method
        - Difference between consideration paid (generally its FV) and net assets acquired recognised in equity.
        - Net assets measured at book value per transferor accounts, adjusted to achieve uniformity of accounting policies.
      - Option 3: As pooling of interests method, except the difference between consideration paid and net assets acquired is recognised as profit/loss in the income statement.

- **No**

  - Profit/loss recognised in income statement, based on difference between consideration paid and net assets acquired. This profit/loss will not always equal the transferor’s profit/loss due to differences in valuation methods between the companies.

'Net assets acquired' includes any Present Value of In–Force (PVIF). Goodwill is over and above any PVIF recognised by the transferee.